Chapter 12, Problem 8P

To determine

Concept Introduction

Marginal Cost: This refers to the change in cost which is incurred when an additional unit of any good or service is produced. It shall be calculated as follows:

Average Variable Cost: This refers to the variable cost per unit at a particular level of production. It shall be calculated as follows:

Average Total Cost: This refers to the total costs per unit which includes both fixed and variable costs at a particular level of production. It shall be calculated as follows:

Shut-down Price: This is the level of price when the revenue is equal to the variable cost. This happens when the price is equal to the lowest average variable cost. When the price falls below this level, the production of goods shall shut-down.

Supply Curve: This is the relationship between the quantities supplied by the producers in the market of a good or service at different prices, shown with the help of a graph.

Demand Curve: This is the relationship between the quantities demanded by the consumers of a good or service at different prices, shown with the help of a graph.